Hi pattim,
Shutdown the device, remove the failed HDD, insert the new HDD, restart the device. Login into the device, and select Rebuild ... that should mirror the "data" HDD to the newly inserted HDD.
From there, a resychronization should occur to ensure that both members are identical.
A "degraded" state typically indicates that an HDD in the array has failed. Some folks have reported that in some cases, it implies that a resynchronization needs to be perform - I personally have not experienced this ... HDD has always failed in my situation.
HTH,